Redmond v. Blau
265 S.E.2d 329
Ga. Ct. App.
1980
Check Treatment

REDMOND et al. v. BLAU et al.

58806

Court of Appeals of Georgia

DECIDED FEBRUARY 11, 1980

153 Ga. App. 395

CARLEY, Judge.

SUBMITTED NOVEMBER 5, 1979

CARLEY, Judge.

This is the second appearance of this case in the appellate courts. The facts, which are fully set forth in

, need no extensive reiteration. Briefly, in the prior decision, this court held certain “agreements” executed by appellees evidencing interest-free loans to Phoenix Academy, Inc., of which appellants are trustees, to be “securities” within the meaning of Georgia Code Ann. § 97-102 (16). The Supreme Court declined to review this holding on certiorari. The case was returned to the trial court where, after discovery, appellee-security holders moved for and were granted summary judgment. Appellants appeal from this order granting summary judgment to appellees, enumerating several errors but arguing only that the trial court erred in finding the “agreements” to be securities.

This issue was raised and decided adversely to appellants’ contentions in the prior appeal of this case. The decision in

, that the “agreements” were “securities” established the law of the case and as such was binding on the trial court and is likewise binding on this court in the instant appeal. Code Ann. § 81A-160 (h);
.

However, appellants, in support of the instant appeal, cite

. In that decision, the Supreme Court criticized the approach taken by this court in deciding
, stating that that approach did not “tally” with the actual approach used by the federal courts in determining whether an instrument was a “security” and that the
approach was not the correct way to proceed in deciding securities cases. The Supreme Court concluded that “the label placed on the instrument by the parties or by the courts does not determine whether the instrument is a security. Instead, the characteristics of the instrument and the underlying economic reality are the significant factors for a court to consider in classifying an instrument as a security.”
, 243 Ga. at 238, supra. Though the approach used by this court in our previous
decision was thus criticized by the Supreme Court, no opinion was expressed as to the result reached in that decision.
, supra. On the basis of this criticism of
, appellants urge in the instant appeal that the grant of summary judgment to appellees should be reversed.

We are in sympathy with appellants’ argument but find ourselves, through application of the law of the case rule, without the authority to reinvestigate the status of the instant “agreements” as “securities” in the context of this appeal. “Even if it were likely that this court would change its views so soon on the questions presented alike by the former and the present records, it has not the right or legal power to do so, so far as affects this case.”

. The
decision, whether right or wrong, being the law of the case, binds this court in the instant appeal.
;
. “While the holding in [
] on its previous appearance before this court may be reviewed and overruled in another case, as between these parties it must stand. [Cit.]”
. See also
. This result attaches even though the Supreme Court‘s subsequent decision in
may demonstrate that our previous decision in
was “erroneous.”
;
.

Thus we are in the rather anomolous position of affirming this appeal on the basis of a prior decision of this court, the approach taken in which has been criticized by the Supreme Court. We are unable to re-evaluate the merits of appellants’ arguments in light of the Supreme Court‘s enunciation in

of the proper approach to be followed in securities cases because this court‘s prior application of the incorrect approach was made in the context of a previous appearance of the instant case before us. In view of
, a finding that “agreements” similar to those here in question are “securities” may never again be upheld by the appellate courts. However, in the instant appeal, the application of the law of the case rule mandates that the “agreements” are, conclusively, “securities.” Even though we have neither the authority here to overrule the approach previously taken in deciding
nor to affirm or overrule the result reached in that decision by analyzing the characteristics of these agreements and the economic reality underlying them, in future cases the Supreme Court‘s approach in
and not that applied in
will be followed.
‘s approach and the resulting decision finding the “agreements” to be “securities” is binding authority only in the instant appeal. It seems illogical and inconsistent with the objectives of appellate review that while this court can avoid perpetuation of its previous erroneous decisions by applying in different cases what it later perceives to be the true rule, it is powerless to correct its errors on a later appearance of the same case. However, the authority to cure this inadequacy lies not in the courts but in the General Assembly.

Judgment affirmed. Deen, C. J., concurs. Shulman, J., concurs specially.

John H. Calhoun, Jr., for appellants.

M. Nathan Blau, Saul Blau, for appellees.

SHULMAN, Judge, concurring specially.

I agree with everything written by Judge Carley in his opinion; however, I feel constrained to comment that the Supreme Court in its criticism in

would not overrule
. We are therefore faced with hindsight that provides no assistance to our present dilemma.